This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Dimming Lights of Apollo Global

The financials are ugly as Caesars has had five straight quarters of losses and may now need to restructure its debt. Moody's gives the company a credit rating level reserved for customers in "poor standing." Remember if this company goes under, those bond holders come first and those unlucky IPO buyers? Well, buying this stock was a roll of the dice.

Berry Plastics (BERY - Get Report) is another Apollo deal that fell flat. It too was bought by Apollo in 2006 and then sold to the public last week. Debt? $3.8 billion. It was priced at $16, but opened at $15.25 and can now be bought for $15.00. Apollo still owns 59% of Berry, but with the way they've burned the public on these deals investors have less appetite to help Apollo out.

Even Apollo's own IPO hasn't gone well. The company went public in 2011, priced its shares at $19 and hasn't seen that level since.

Renaissance Capital noted in its second quarter 2012 review that private equity-backed IPOs deal size was down 51% and proceeds fell 56%. At the time of the review Renaissance noted that Ignite Restaurant Group (IRG - Get Report) was the shining story of the group. That company has since gotten in trouble for its accounting and dropped from $19 to $13 a share.

To be fair, they haven't all been losers. Apollo brought out GNC (GNC) and that stock has performed fairly well. But even GNC went to the IPO table only to be pulled at the last minute and similar to the others, it is loaded with debt. GNC carries a little over $1 billion in debt, but luckily the company was helped with increasing revenues.

Still GNC is fighting many lawsuits related to the Hydroxycut supplements and is subject to product recalls -- the most recent being a peanut butter product. The stock, though is up 36% for year-to-date.

The lesson? When an investor sees Apollo is associated with an IPO, he or she should look closely at the debt levels and logically think about what it will take for the company to be able to pay off that sum. If the answer is one perfect quarter after another, they may want to steer clear of helping Apollo out with said debt.

After all, many of the buyout firm's deals have come to market with plenty of flash and buzz. But it hasn't taken long for a lot of these bright lights to dim when the reality of their debt-laden balance sheets begins to set in.

-- Written by Debra Borchardt in New York.



>To contact the writer of this article, click here: Debra Borchardt.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
APO $21.11 -0.75%
BERY $35.34 0.97%
CZR $9.54 -0.10%
IRG $5.16 -0.96%
AAPL $123.87 -0.30%

Markets

DOW 17,692.58 +14.35 0.08%
S&P 500 2,059.76 +3.61 0.18%
NASDAQ 4,878.7580 +15.3960 0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs